1/4
I don't know how you can credibly model these things, especially given the difficulty of accounting for the impact of debt, but you get the same conclusion simply from the economic logic. Income inequality can be economically justified in an economy in which the main... https://twitter.com/scottsantens/status/1384267511458271234
2/4
constraints to productive investment are scarce savings and the high cost of capital. In that case the higher savings of the rich can be used to fund rising investment and employment, and eventually everyone benefits.
3/4
But in an economy with weak demand and rapidly rising debt (needed to prop up demand) the main constraint isn't the lack of savings but rather the lack of robust demand. Rising income inequality makes this worse by converting real demand into unwanted savings.
4/4
Today American businesses raise huge amounts of cash not to improve production and do research but rather to acquire companies and rearrange their balance sheets. Give more money to American consumers and American businesses will invest.
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